Parent PLUS loans are just one option for parents to help cover the costs of college. To help you decide if this is a good option for your family, take a look at the following tips on applying for and managing your Parent PLUS loan.

1. Determine if it’s the right choice for you

What I mean by this is, Parent PLUS loans are solely in the name of the parent, and cannot be transferred to the student. Before applying, make sure you know that you’ll be responsible for paying it back. If you’d rather be a cosigner on a loan in the student’s name, then your best option would be for your student to apply for a private student loan.

2. Don’t stress about credit

PLUS loans have minimal credit requirements when compared with private loans. The check does not take credit score into account, and only looks back 5 years to determine if there are any adverse credit issues during that time.

If you did have an issue during that time, don’t fret! You have the ability to appeal a declined PLUS loan if you have extenuating circumstances. For more on what constitutes an extenuating circumstance, read A Parent’s Credit and PLUS Loans.

If you’re still declined for credit reasons, your student becomes eligible for more Direct Stafford Loans, increasing to the independent student loan limits.
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Families everywhere are currently sweating over financial aid award letters, trying to decipher aid and make the huge decision about which school is the right choice for both the student, and family finances. However, once the college decision is made, there is still a lot to do, including applying for student loans!

To help families through this award letter season, here is a breakdown of how and when to accept—or apply for—all types of student loans.

Perkins and Stafford Loans

When to Accept: April-May for Fall semester
How: For these loans, students can simply accept their loan amounts through the financial aid office. To finalize the acceptance and before they can receive the loan funds, students must complete a Master Promissory Note (MPN) online at StudentLoans.gov and complete an entrance counseling session as directed by the school.
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You can refinance your mortgage, but can you refinance your student loans? The short answer is: possibly. Let me elaborate.

Refinancing is a tool commonly used by borrowers in the housing industry to lower interest rates. In regards to student loans, refinancing options are not widely available and depend on the type of loan you have.

Consolidating Federal Student Loans

Federal student loans (such as Stafford Loans) are not able to be refinanced but they can be consolidated. For federal loans, you must consolidate them through a Federal Direct Consolidation Loan which determines your new interest rate as a weighted average. Unfortunately, weighted averages do nothing to lower your rate.

However, there are still some benefits to consolidating your loans, such as:

• It lowers your monthly payment by extending the term of the loan
• It makes managing your repayment easier by combing multiple federal loans into one

Probably not the answer you were hoping for, but consolidation can be helpful to those struggling with high monthly payments.
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As you may have heard by now, the recent sequestration has huge implications for education across the board, and Higher Ed. is no exception. The budget cuts that took effect on March 1, 2013 will affect most types of federal student aid, including Federal Work Study (FWS), Federal Supplemental Education Opportunity Grants (FSEOG), Service Grants, TEACH Grants, and the Direct Student Loan Program. Fortunately for many students, Pell Grants were specifically exempt from the budget cuts.

Here’s a brief overview of what to expect from student aid programs going forward:

Federal Work Study and FSEOG Programs

Budget cuts of $86 million do not only mean a reduction in the FSEOG program, it could also mean a loss of on-campus employment for as many as 33,000 students if colleges do not step in with funding. While these campus-based programs are funded through the remainder of this year, program cuts will take affect for the 2013-2014 academic year.

Iraq – Afghanistan Service and TEACH Grants

For both of these federal grants, funding has been reduced for any award first disbursed during the sequester. It should have no impact on grants first disbursed before the cuts took effect.
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Every year we get the same question, so here is your answer:

For the 2013–2014 year, the FAFSA will be green, with a purple section for parents.

For the current year, 2012–2013 the FAFSA is orange.

In previous years:

• 2011–2012 FAFSA was Yellow
• 2010–2011 FAFSA was Blue

For detailed information on completing the FAFSA, visit FAFSAonline.

You may have heard of Stafford loans, PLUS loans, and private student loans, but do you really know the differences between them? Is one type of loan really better than the other? Let’s find out.

Subsidized Stafford Loans: The Best of the Best

Subsidized Stafford loans are the best type of student loan, and should be taken out before any other type. Stafford loans carry a 3.4% fixed interest rate, and the federal government will cover your interest payments until graduation. Interest will start to accrue after graduation, but you will not be required to make your first payment until 6 months after graduation. As an undergraduate, you can take out a maximum of $23,000 in subsidized Stafford loans in your lifetime.

Unsubsidized Stafford Loans: The Next Best Thing

Unsubsidized Stafford loans are federal loans that have 6.8% fixed interest rate. Contrary to their subsidized counterpart, interest accrues for unsubsidized Stafford loans while you are enrolled in school. However, similar to subsidized Stafford loans, your first monthly payment will not be due until 6 months after graduation. In addition, unsubsidized Stafford loans are also need based, and not impacted by your credit score. As a dependent, undergraduate student, you can take out a maximum of $8,000 for undergraduate studies. Unsubsidized Stafford loan limits vary based on your education status.
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Student loans have been all over the news in the past year, and borrowers are researching college financing options more than ever. In light of this, it’s important to know the facts so you can make better-informed decisions about paying for college.

1. 90% of private loans require school certification

Schools must approve a loan based on the student’s cost of attendance. This ensures that borrowers aren’t taking out more than they need, keeping them out of further debt.


2. More than 90% of approved applicants applied with a cosigner

Because many students have little to no credit history, most loans will require a credit-worthy cosigner to be approved. The good news is that cosigner release is now common among private loan lenders, allowing the cosigner to be released from obligation after a certain number of on-time monthly payments. (more…)

This week, many student nationwide are rejoicing in their college decisions, having just sent their deposits to their chosen colleges. Simultaneously, parents everywhere are worrying about how to pay the upcoming tuition bill. If you’re one of these parents, you may be weighing the pros and cons of tapping your 401k for those funds. In this instance, it may be more beneficial to be a little selfish. Here’s what I mean…

Tapping your 401k to pay for college tuition is usually not a good idea. Whether you’re thinking about withdrawing funds, or borrowing against your 401k or IRA, both options end up leaving you with less funds for retirement. Anytime you withdraw funds from your account, the money will be slapped with a hefty 10 percent penalty AND subject to taxes. If you’re looking for a deal, this really isn’t your best option.
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April is financial literacy month and this blog kicks off our financial literacy blog series! In keeping with this spirit, I wanted to break down some common student loan terms so that students and parents can be better informed about the student loan choices they make.

Basic Terms

The following are a few basic loan terms that are imperative to know when taking out a loan for the first time:

Principal – The total amount of the loan when you take it out. Interest accrues on this amount.

Origination fees – These are fees charged by the lender for the “creation” of the loan.

Interest – The amount charged for use of the loan money.

Capitalized interest – An amount of interest that is added to your principal. This means that if you have a loan of 10,000 with $100 in interest, once your interest is capitalized your loan principal becomes $10,100. It’s always best to avoid capitalizing interest because any interest that accrues after is going to be based on this new, higher principal balance, so you will end up paying more over time.

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Public Service Loan Forgiveness is a federal program that rewards public service employees for working in their chosen professions. As you might suspect, the reward is forgiveness of your student loan balance, an offer that many seek but few are able to take advantage of.

The Department of Education has recently made improvements to the PSLF process. While the requirements remain the same, they are more clear, and there’s a variety of new documentation to help get you through the application process.

If you’re not familiar with Public Service Loan Forgiveness here’s a brief overview:

Who is it for?

Employees who have worked for a qualifying public service organization for a minimum of 10 years. This does not mean your specific role at the organization needs to qualify, you simply must work for a qualifying organization.

Qualifying organizations include:

• Federal, state, or local government organizations/agencies
• Non-Profit organizations that are tax-exempt under Section 501©(3) of the IRS guidelines

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